What is Payment Protection Insurance (PPI)?

PPI is an insurance policy offered by lenders to their debtors. This type of insurance cover is meant to protect the debtor from seizures and repossession in the event they are unable to bring in minimum loan payments due to unforeseeable circumstances such as accidents, loss of job or illnesses that render the debtor as immobile and unable to work. In this situation, the cover steps in and makes the necessary payments until you are back on your feet.

Just like it is the case with all types of insurance policies, income protection cover has its pros and cons. If you are new to this type of insurance and are planning on sending your application soon, then you’d be better off learning a thing or two about it before making a decision. This article provides you with some important information on the subject.


Easy qualification
Qualifying is very easy when you are in good terms with your lender. In fact, some lenders will actually mention this package to you via mail or on your monthly billing statement.

Immediate Coverage
Depending on your lending company’s terms and conditions, the cover may take effect as soon as you complete all the necessary forms. These services vary from one company to another and all you have to do is pick the one that suits you the best. Some of them take up to 4 months before the cover takes effect but you can easily find one with faster services by visiting the internet.


This insurance may seem inexpensive at first but after some time, the cost can really weigh down on you, especially if you never took time to do your calculations well. Fees for the insurance are added to your monthly payment and can even increase your credit line, raising interest rates. The fact that your company can increase the credit line without first notifying you makes it important to prepare before applying for one.

Mis sold PPI
Mis sold PPI is a situation whereby an insurance company sells insurance to ineligible people. These can either be people with no jobs, those who have pre existing health issues and the self employed. Customers will naturally make PPI claims when they are in a financial fix. In this case, the claim will usually get denied. This can be very frustrating a you can imagine. There is usually a refund given to those who find out they got mis sold but this is a complex process that takes months to finalize.

Benefits Of Income Protection Insurance

If you have a risky job or have a medical condition that may stand in the way of your professional life, then you are better off applying for this type of cover. If anything was to ever happen to you and you were unable to make your monthly payments, the insurance cover comes in and gets you out of your predicament. This will protect you from going deeper into debt since you won’t be able to work within that particular period of time.

When calculating PPI, it’s important to note the fact that insurance premiums are tax deductible. For instance, if the premium is £100/m and your salary is £42,000 p.a. the yearly premium after taxation is £70/m. if calculating becomes to difficult for you, then you can turn to one of the many financial advisers there are out there. Your insurance company may also be of assistance in this situation.

Before choosing a policy, it will be a good idea to take some time off comparing the pros and cons associated with different covers. Also, take time choosing the right company to work with since services vary. You will save yourself a lot of trouble by simply going through their terms and conditions carefully to avoid surprises in the future. 

Payment protection Insurance may seem as too much work in the eyes of many but the benefits of such a policy are endless. You are offered the chance to make claims when you are in a predicament and can no longer make your normal monthly payments either due to an illness or accident.